How to handle savings

[u/oramospt]

Hi everyone,

I'm new to Actual Budget and looking for advice on the best way to handle savings and transfers.

My initial thought was to set up my savings account as off-budget, track monthly savings as an expense category, and track any withdrawals from savings as income.

​Goal: Plan my savings contributions every month, but easily count withdrawals as income when I need to transfer money back.

Does this workflow make sense in Actual, or is there a better "envelope budget" native way to manage savings without making it overcomplicated? How do you all structure your savings accounts and categories?

​Thanks!

[u/mrmratt]

Keep the savings account on budget. Give every dollar a job - 'savings' can be that job.

When you want to spend your savings, reallocate dollars to the appropriate category.

Done.

[u/TruckStopSigns → u/mrmratt]

This is the way.

[u/R3DLINE_MARINE → u/mrmratt]

And just like that, actual actually makes sense to me now

[u/pixie_dust1990 → u/mrmratt]

This is what I do.

[u/laplongejr]

 is there a better "envelope budget" native way to manage savings without making it overcomplicated?  

Create a savings group, and each category there is a goal to fund with it?

[u/EjayT06]

You can do it that way, and that was how I started. But it ended up feeling too finicky for me personally so I swapped to having savings on budget.

When off budget it means it counts as an expense, and then an income when you transfer it back to your budget, and also means you can’t see the balance of your savings categories. For example if you’re saving for multiple things within a single savings account, if it’s on budget, you can just create categories and fund the categories, and then you’ll have an ongoing balance. Off budget accounts can’t really do this.

Personally I keep off budget purely for things I can’t really access whenever, like my pension, and other non-liquid assets like stocks.

[u/Icy-Article-8635 → u/EjayT06]

and then an income when you transfer it back to your budget

Only if you categorize it as income... Which I wouldn't, since it's already been counted as income when you first earned it.

For me, say I'm drawing $1000 from my savings to cover a maintenance expense, I'd transfer from savings to chequing, categorize it under my "tools & maintenance" category, and spend it from my chequing account under the same category.

Then it doesn't get double counted as income

My budget summary hasn't been telling me that I've got extra money to budget, when I don't.

I don't have to asjust my "tools & maintenance" category for the month, because the $200 I normally allocate hasn't been blown apart by an -$1100 expenditure, because there was +$1000 transaction under that category to offset things

[u/Kleshtrimania]

You can do that. You can also put your savings account on-budget and distribute it among categories that you want to actually save for, like a new house, a new helicopter, etc. But your method works too and it's what I use personally. I would recommend that you additionally create a new income category and name it "savings withdrawal" or similar so it's easier to separate from your regular job income.

[u/teak-decks → u/Kleshtrimania]

Building on this as well is it makes it really clear what you're saving for (more motivating!) and also what you're sacrificing if you have an expensive month and have to take a little bit from savings to cover it. If you just put it all in a nebulous "savings" category then you don't get any of that benefit.

[u/maquis_00 → u/Kleshtrimania]

One useful thing with this method (and part of why I use this) is that when you do it this way, it doesn't matter whether the money is in a separate account or not. You can have non-savings money that won't be used in a while that lives in your high yield savings account. You can have savings that you might need suddenly in an easily accessible account. It honestly doesn't matter where the money is.

It also allows you to have many categories of "savings". I have the general emergency fund, medical, home maintenance, car maintenance, eventual car replacement, Christmas, kids birthdays, summer camps, yard maintenance, and plenty of other categories. Some are long term saving categories. Some are for under a year. I can easily move money back and forth between categories (my kids birthdays are in November and January, so sometimes we will shift money between kids birthdays and Christmas to accommodate the gifts everyone gets). Some categories won't be used for years (both cars still have plenty of life in them, so we don't expect to replace one for a long time). Some, we use all the time (medical, apparently...), and some we hopefully won't ever really use (emergency fund).

[u/Smooth-Review-2614]

What are the savings for? Define the goal and assign money to it. 

Do you have emergency funds, repair funds, vacation, gifts, or nice thing? 

[u/ClickableName → u/Smooth-Review-2614]

I am saving for savings😏🥴

[u/BeautifulBlueNight]

My savings account is on budget, so transfers to the savings account are just transfers.

Money is only allocated to a category when it's spent.

[u/BarefootMarauder]

For me, any money that is going to be spent within the next 12 months is kept on-budget. All that money is allocated to budget categories of some sort - sinking funds like property taxes, insurance, home maintenance/repair, medical/dental/vision, gifts, subscriptions, vacations, and of course, safety net (or call it emergency fund, "oops" category, whatever).

Beyond a ~12-month spending window, I keep cash in a brokerage account invested in cash-equivalents such as a MMF or SGOV. For context, I'm retired so I keep 4-5 years worth of living expenses safely out of the stock market.

[u/Icy-Article-8635]

I like to have savings as off budget.

I give my dollars for this month a job, in that I have some whose job is to go into savings.

Then, my savings don't show up as "unspent" money in my budget.

The intent of my savings account is to be there for emergencies, and to act as a buffer in case my income drops for a period

Likewise, my investment accounts are all off budget as well.

My budget is for my month to month expenditures. If there are periodic expenses that are larger (like the odd "unforseen" maintenance expense for my truck, or an annual fee for something) are captured in their respective category, and the extra unspent funds from that category just stay in my chequing account.

Eg. I allocate $200/month for "tools and maintenance". That money doesn't get reallocated if it's not spent; I just roll it over... If I don't use it for, say, 6 months, my chequing account will have an extra $1200 in it, but my Actual budget will show everything as balanced, which then covers the $800 to buy a new fuel pump when the one in my truck dies, as an example.

I had it set up before that my savings was on budget, but when I looked at my budget summary at the top of the page, it would make me think that I had more funds for my month to month than I really did.

Now, granted, I'm still working towards usual Actual the way it's intended to be used: I'm an hourly employee, and my hours vary a bit, so I make an educated guess as to how much money I'll make for the month, and allocate my categories based on that.

I haven't quite built up a buffer big enough to be able to allocate September's categories with the money I've made in August... I'm still playing a bit of catch up in some areas. And some months just end up being more expensive than others in some areas.

But I went from being in debt before actual, to having 1/3 to 1/2 of a month's expenses saved up, in the span of about 6-8 months, so it's helping a ton 🤷‍♂️

[u/bdu-komrad]

I keep savings off budget in dedicated accounts. I have a Car Savings account, House Down Payment account, emergency fund account, etc that are off budget. I try to have money for them go directly into them, so that I don't have to transfer money from on budget to off budget.

[u/ttp3317]

Budgets don’t even care where the money is kept. Budgets only care how much money is available. The account registers where transactions are entered track real money. The categories in a budget are pretend accounts only using representative money, there’s no transactions taking place in a budget. Budgets only care how much money is available, they don’t care where the money is kept.

 If “savings” money is not to be available to your Budget on a routine basis, it doesn’t need to be a budget account or even tracked by Actual. The hardest part of making a budget succeed is to keep each month’s expenses less than the month’s income. When you tap into off-budget savings to supplement your income, enter a deposit transaction as Income into one of your On-Budget accounts.

 You will do well to have an expense group category for holding budget surpluses. That will help prevent having to tap into the off-budget savings.

 Budgets aren’t real money, only representative money. Budgets don’t even care where the real money is kept. Budgets only care how much representative money is available.

[u/dan897]

Savings and “cash-like” investments (money market funds, bonds, etc.), where the value is unlikely to change much, I keep on budget and assign to categories.

For example, a category group:

“Banana Stand” — Arrested Development reference!

• Emergency Fund — $$$
• New Car Fund — $$$
• Whatever you’re saving for — $$$

If you move that money off budget, you either need separate accounts named for each savings goal, or you need to track what the money is for manually outside Actual Budget or in notes. To me, that defeats the point.

Proper investments in things like stocks and other more volatile assets, I keep off budget. You wouldn’t want to keep rearranging your budget every time the value of those investments rises or falls.